No let-up seen in forced sales

Western Australia is looming as this year’s distressed property hot spot, according to insolvency practitioners. They also warn Queensland will experience no relief from its wave of receiver appointments, after it represented more than half of distressed property listings last year.

PPB Advisory head of real estate Brett Lord said WA had an oversupply of residential subdivisions, particularly on the city fringes and in southern regional areas such as Busselton.

“The short answer is there’s a lot of pain to come," he said.

Pitcher Partners’ Perth managing director Bryan Hughes said he was already seeing more inquiries this year. “The fact is there is a lag in Perth, and we have dodged the worst [of the economic problems] so far thanks to the scale of the spend in the north-west," he said.

Mr Hughes said higher costs and wages were putting many businesses, particularly in retail, under pressure, and the drain on labour from the mining boom was being felt across all sectors.

He expected to see more non-income generating development sites moving through the system this year.

“There is still a reservoir of those assets that have sat out there and the lenders have been patient, but with the absence of finance, they become a problem," he said.

According to research by Colliers International, distressed property jumped by 30 per cent in 2011, with 775 properties on the market, more than half of those in Queensland.

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“In Queensland in particular, distressed assets across all sectors have come to market, led by the Gold Coast and Queensland fringe markets, including some tourism markets," the report said. “Development sites, residential towers and retail developments have been hardest hit."

A number of small and medium property developers went into receivership in Queensland last year, including the listed CEC Group.

Hospitality ventures were also under strain in 2011, with the NSW-focused National Leisure and Gaming Group going into the hands of receivers with debts of about $160 million.

Mr Lord said he expected his Queensland team to stay busy throughout 2012.

“There’s still a lot of property assets [loans] which have expired or are due to expire for which there are no answers. They can’t be refinanced, they can’t be resold," he said.

Hospitality and development sites would continue to struggle, Mr Lord said, but he expected activity across all sectors in Queensland.

“Industrial property is also struggling with a high vacancy rate of around 8.5 to 9 per cent. There is an oversupply in some areas," he said.

“I think we will see more assets that are generating income. The Brisbane office is seeing a lot come through and they are selling."